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The Coming Government Spending Spree

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The end of the U.S. government’s fiscal year is less than two months away, and as Frank Konkel lays out at Nextgov, that means federal agencies will be on a mad dash to spend a big chunk of their budgets — and some $140 billion more than they thought they’d get before Congress passed a $1.3 trillion spending deal earlier this year.

Here’s Konkel:

Without a budget agreement in place, agencies spent cautiously through the first two quarters of fiscal 2018 before the omnibus—signed six months late in March—obligated an additional $80 billion for defense and $63 billion for civilian agencies.

Federal agencies, now flush with cash, must obligate that money before the fiscal year ends on Sept. 30 or lose it to the Treasury Department. Analysts believe the federal market will see a monumental effort among procurement officials to spend as much on contracts as possible.

The situation: The federal government has spent $308 billion on contract awards so far this year, according to data published by The Pulse of GovCon last week. While roughly a third of agency spending typically occurs in the final calendar quarter — and 6 percent to 8 percent of annual contract spending occurs during a September end-of-year spike — so far this year only two of the 10 largest federal agencies have spent 70 percent of their discretionary budgets. “In short, this means there is a lot of money, more than normal, still on the table for Q4 FY18,” the Pulse report says, though some of that appropriated money will remain available in fiscal 2019.

Why spending has been slow so far in 2018: The uncertainty resulting from government funding legislation being enacted almost seven months late is one likely factor (note, too, that the omnibus spending bill allowed for 25 percent of all the spending it authorized to occur in the last two months of the fiscal year). But The Pulse of GovCon report suggested some other reasons: “One could theorize that this is due to the time-consuming, broken procurement process we all have learned to love (hate). Or based on the data, we can collectively make a few more assumptions that this has more to do with undecided federal priorities, 170+ key FedGov vacancies, 13K federal jobs cut to include federal layoffs and turnovers, hiring freezes, and possibly the Administration slow-rolling spending.”

The bottom line: The final months of 2018 will likely see an unusually high federal spending spree, but government contracting officials may also have more on their plates than they can handle before the end of September. The Pulse report also predicts that “you will see a lot more of this ‘new’ money in the new (fiscal) year, and not in the slowly closing Q4 window.”

As editor in chief, Yuval Rosenberg oversees all aspects of The Fiscal Times' website and email newsletter. His writing has appeared in publications including BusinessWeek, CNBC.com, CNNMoney.com, Fast Company, Fortune, Newsweek, Money and Time.